Wage Rises Could Cost Bt100 Bn In Foreign Direct Investment (FDI)

[webfact]

WAGE

Wage rises could cost Bt100 bn in FDI

By Nalin Viboonchart

The Nation

Thailand may lose Bt100 billion per year in foreign direct investment (FDI) if the new government immediately raises the daily minimum wage to Bt300, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) says.

Chairman Dusit Nontanakorn yesterday said the minimum wage in Malaysia was 10 per cent higher than the minimum wage in Thailand, whereas in Indonesia it was 10-20 per cent lower.

If Thailand adjusts the daily minimum wage to Bt300 throughout the country, it will be more expensive than other production bases in Southeast Asia. In the long term, foreign investors may consider relocating to other countries such as Vietnam, he said.

Thailand attracts FDI of about Bt400 billion per year. If the country raises minimum wages, FDI is likely to drop 25 per cent per year or Bt100 billion, he said.

Dusit said he had discussed the issue with many foreign chambers of commerce in Thailand. Most said foreign investors considered competitiveness before deciding to invest in a country. If labour costs rose, some investors could relocate to other countries and it would be very difficult to bring them back.

"The Asean Economic Community will happen in the next four years. Investors have many choices for their investments. It is not necessary for them to stick with Thailand all the time," he said.

Dusit said that in the short term, about 90 per cent of small and medium-sized enterprises would be affected, as they would not be able to absorb the increased costs.

The JSCCIB is ready to discuss the policy with the new government to find a way to reduce its impact, he said.

Payungsak Chartsuthipol, chairman of the Federation of Thai Industries, said the daily minimum wage should be adjusted through the Wage Tripartite Committee without political interference. If the Pheu Thai-led government insisted on the policy, the FTI would require it to pay the wage difference.

In a separate matter, Payungsak said the Thai Industries Sentiment Index (TISI) in June dropped to 107.4 from 108.3 in May because of higher oil prices, financial problems in Europe and concern about political problems.

Flooding in Northern provinces was also a concern for industrialists, as it was affecting production volumes.

Over the next three months, the TISI is forecast to increase slightly to 113.5 from 111.2 in May, reflecting industry confidence in terms of orders, sales and production volume.

-- The Nation 2011-07-21

[canardo]

CYNICAL MODE ON:

So why not lower the minimum wages in Thailand to 100 THB / day and worker?

Like this all the foreign investors are coming more easily, however the poor Thai workers will suffer even more, but who cares?

CYNICAL MODE OFF!

[Galong]

And the fact is not mentioned that the Thai overlords who run the factories where the foreigners would invest would simply hire more cheap laborers from Burma and elsewhere if the minimum wage went up.

I'm often amazed at how many Burmese workers there are who are doing jobs that obviously should be done by Thais. For example, the other day I had some tires replaced and guess what nationality the tire-changers were? I am all for helping the poor Burmese with employment. That's not what I'm talking about. I'm talking about the actual percentage of Burmese laborers compared to Thai laborers. Burmese do much of the rubber plantation work, seemingly all of the construction work, and much of the unskilled labor. Why aren't the Thais up in arms about this?

I am also, of course, all for Thais getting a decent salary. I don't see how they exist on the meager salaries they get in most cases. If the incoming party wants to help the poor, do something more to protect the workers from their Thai bosses.

[edwinchester]

I'd guess that Thais aren't up in arms about all the Burmese labourers because they're happy to have them do the menial work. It's only when they start losing the 'better' jobs that the complaints will start.

[geriatrickid]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

[Thai at Heart]

And the fact is not mentioned that the Thai overlords who run the factories where the foreigners would invest would simply hire more cheap laborers from Burma and elsewhere if the minimum wage went up.

I'm often amazed at how many Burmese workers there are who are doing jobs that obviously should be done by Thais. For example, the other day I had some tires replaced and guess what nationality the tire-changers were? I am all for helping the poor Burmese with employment. That's not what I'm talking about. I'm talking about the actual percentage of Burmese laborers compared to Thai laborers. Burmese do much of the rubber plantation work, seemingly all of the construction work, and much of the unskilled labor. Why aren't the Thais up in arms about this?

I am also, of course, all for Thais getting a decent salary. I don't see how they exist on the meager salaries they get in most cases. If the incoming party wants to help the poor, do something more to protect the workers from their Thai bosses.

I tend to agree with you. It has become far too easy for employers to bring in cheap foreign labour, and I believe it is not because they can't find Thais to work for minimum wage, but simple profiteering. This needs to change.

[whatsupdoc]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

Paying the minimum wage is exploiting workers?

A lot of people here just haven't got any idea what typical wages in Thailand are. True, it may not be much in Western eyes but I know quite a lot of Thai making a little more than minimum but they all have quite a decent living standard, own a motorcycle, have a proper place to live etcetera.

Raising the minimum wage by 50-90% in a short time is going to be a disaster. Labour intensive industries and the service industries (like restaurants, hotels) will have the choice to increase prices, lay off employees or close shop. In the end, many of the lowly -paid employees will be worse off due to unemployment and inflation.

[AyG]

Whilst increasing the minimum wage might be folly and lead to rampant inflation, it's not going to cause any major unemployment problem. Thai unemployment is currently 0.5% of the workforce (source: http://www.tradingeconomics.com/thailand/unemployment-rate) - one of the lowest in the world.

[whybother]

Whilst increasing the minimum wage might be folly and lead to rampant inflation, it's not going to cause any major unemployment problem. Thai unemployment is currently 0.5% of the workforce (source: http://www.tradingec...employment-rate) - one of the lowest in the world.

With such a low unemployment rate, you would think that wages would be forced up naturally.

[exbelg]

let them implement and they can find out thailand can become the HUB of leaving foreign investment, that is what they want, do they not ? all foreigners out... we can already not own our own house/land and even company (max 49% of your own company, money but you have to pay salraries and taxes)

[geriatrickid]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

Paying the minimum wage is exploiting workers?

A lot of people here just haven't got any idea what typical wages in Thailand are. True, it may not be much in Western eyes but I know quite a lot of Thai making a little more than minimum but they all have quite a decent living standard, own a motorcycle, have a proper place to live etcetera.

Raising the minimum wage by 50-90% in a short time is going to be a disaster. Labour intensive industries and the service industries (like restaurants, hotels) will have the choice to increase prices, lay off employees or close shop. In the end, many of the lowly -paid employees will be worse off due to unemployment and inflation.

Thank you for your effort at the perpetuation of the myth that minimum wage allows for a quality standard of life. These people may be in possession of a motorcycle or a home, but the mimimum wage class often do not own those things. Those material possessions are financed and the people live in debt waiting for the house of cards to collapse. No one at a minimum wage job can ever hope to save enough to own a home or motorcycle outright. They can however, live in a building crammed with family members with limited privacy.

Do you know what the minimum wage in Thailand is? The minimum wage ranges from 159 baht a day in Phayao to 221 baht in Phuket for a national average of 175 baht.

Do you have any idea as to what the cost of living is for many workers on Phuket? In higher paying Phuket that works out to about 5500 baht per month. My friend lives in a small room outside of Patong. He pays 5000 baht/month. Its basic. A cheap meal on the street goes for 40-60 baht now. If he cut corners, he could probably survive food wise at 100 baht/day which is approx. 3000 baht/month. Sure, if he lived on processed noodles and processed pig entrails it might be a little less, but some people do not want to eat garbage. That puts his starting costs per month at 8000 baht and he hasn't even paid for electricity or water or work clothes. Let's say he keeps all those other basic costs at 2000 baht per month, which means he dresses like a hobo and gets crap from his employer for looking like a Pattaya expat, altogether that puts him at 10,000 baht in basic living expenses per month. This would mean no healthcare insurance, no covering of costs for his motorbike, nothing else. One of the minimum wage girls I am aquainted with works at a typical tourist spot and lives in a similar room, except shecrams in her minimum wage boyfriend and her 1 son from a previous marriage. Combined income is better, but in her case she has to pay the expenses of a growing boy. School uniforms, school supplies and fees add up. They live in one <deleted> room smaller than my salon

Please don't tell me that people have more than a marginal existence on minimum wage in Thailand. The labour market is not free and wage costs have been artificially forced down. Any free market capitalist would understand that wages would have risen long ago as the available labour force shrunk. However, the government and the oligarchy have acted to keep wages low. Basically, the arguments for the status quo are the arguments that support the continued totalitarian interference in the labour market and this brings to mind the repressive Soviet state era where central economic planners forced down wages. Part of the capitalist equation is to accept that labour has the freedom to shiftt. Keep in mind that many of the government's economic policies indirectly subsidize the merchant class and service industry in Thailand. Tax policy, and infrastructure investment is not made with the needs of the minimum wage earner in mind.

The argument that somehow a small increase in minimum wage will force companies to relocate is weak. No hard evidence has been given to support the argument. What one has are projections based upon the same flawed thinking that was used to justify the government's interference in the labour market to keep wages low. An increase in worker income will fuel consumer spending and allow the workers some breathing room. A small increase in wages allows the wages to move in the direction of where they should be. I would like to see the people arguing against the wage increase try to live a month on a minimum wage income.

Edited July 21, 2011 by geriatrickid

[Hollywood]

This is the same old story they tell in the US....the companies will leave, workers will get fired and the world will come to an end if heaven forbid workers get a little raise.....

[SAffer]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

Paying the minimum wage is exploiting workers?

A lot of people here just haven't got any idea what typical wages in Thailand are. True, it may not be much in Western eyes but I know quite a lot of Thai making a little more than minimum but they all have quite a decent living standard, own a motorcycle, have a proper place to live etcetera.

Raising the minimum wage by 50-90% in a short time is going to be a disaster. Labour intensive industries and the service industries (like restaurants, hotels) will have the choice to increase prices, lay off employees or close shop. In the end, many of the lowly -paid employees will be worse off due to unemployment and inflation.

Look at the restaurants... the waitering staff are usually busy with their BB' or iPhones, or watching soaps on TV. If they get paid more, maybe the restaurants can expect them to actually work, and then they could use less staff anyway. As a student back home I worked in restaurants- the service levels here are terrible. And there are too many waiters in each restaurant doing too little.

[whatsupdoc]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

Paying the minimum wage is exploiting workers?

A lot of people here just haven't got any idea what typical wages in Thailand are. True, it may not be much in Western eyes but I know quite a lot of Thai making a little more than minimum but they all have quite a decent living standard, own a motorcycle, have a proper place to live etcetera.

Raising the minimum wage by 50-90% in a short time is going to be a disaster. Labour intensive industries and the service industries (like restaurants, hotels) will have the choice to increase prices, lay off employees or close shop. In the end, many of the lowly -paid employees will be worse off due to unemployment and inflation.

Thank you for your effort at the perpetuation of the myth that minimum wage allows for a quality standard of life. These people may be in possession of a motorcycle or a home, but the mimimum wage class often do not own those things. Those material possessions are financed and the people live in debt waiting for the house of cards to collapse. No one at a minimum wage job can ever hope to save enough to own a home or motorcycle outright. They can however, live in a building crammed with family members with limited privacy.

Do you know what the minimum wage in Thailand is? The minimum wage ranges from 159 baht a day in Phayao to 221 baht in Phuket for a national average of 175 baht.

Do you have any idea as to what the cost of living is for many workers on Phuket? In higher paying Phuket that works out to about 5500 baht per month. My friend lives in a small room outside of Patong. He pays 5000 baht/month. Its basic. A cheap meal on the street goes for 40-60 baht now. If he cut corners, he could probably survive food wise at 100 baht/day which is approx. 3000 baht/month. Sure, if he lived on processed noodles and processed pig entrails it might be a little less, but some people do not want to eat garbage. That puts his starting costs per month at 8000 baht and he hasn't even paid for electricity or water or work clothes. Let's say he keeps all those other basic costs at 2000 baht per month, which means he dresses like a hobo and gets crap from his employer for looking like a Pattaya expat, altogether that puts him at 10,000 baht in basic living expenses per month. This would mean no healthcare insurance, no covering of costs for his motorbike, nothing else. One of the minimum wage girls I am aquainted with works at a typical tourist spot and lives in a similar room, except shecrams in her minimum wage boyfriend and her 1 son from a previous marriage. Combined income is better, but in her case she has to pay the expenses of a growing boy. School uniforms, school supplies and fees add up. They live in one <deleted> room smaller than my salon

Please don't tell me that people have more than a marginal existence on minimum wage in Thailand. The labour market is not free and wage costs have been artificially forced down. Any free market capitalist would understand that wages would have risen long ago as the available labour force shrunk. However, the government and the oligarchy have acted to keep wages low. Basically, the arguments for the status quo are the arguments that support the continued totalitarian interference in the labour market and this brings to mind the repressive Soviet state era where central economic planners forced down wages. Part of the capitalist equation is to accept that labour has the freedom to shiftt. Keep in mind that many of the government's economic policies indirectly subsidize the merchant class and service industry in Thailand. Tax policy, and infrastructure investment is not made with the needs of the minimum wage earner in mind.

The argument that somehow a small increase in minimum wage will force companies to relocate is weak. No hard evidence has been given to support the argument. What one has are projections based upon the same flawed thinking that was used to justify the government's interference in the labour market to keep wages low. An increase in worker income will fuel consumer spending and allow the workers some breathing room. A small increase in wages allows the wages to move in the direction of where they should be. I would like to see the people arguing against the wage increase try to live a month on a minimum wage income.

Where in the world is the minimum wage enough for a luxurious lifestyle? Nowhere, but it should be enough for basic living and in most parts of Thailand it is.

An increase in Phayao from 159 baht to 300 baht - you call that a small increase? I would guess that most law-abiding businesses there would go bankrupt.

I do run a business myself with about 10 employees and a drastic increase in the wages would force me to put he prices up, reduce the employee's other benefits and might put me out of business altogether. Many small businesses where I live (Chiang Mai) have folded already, this wage increase proposal, if put into action, is going to kill many more.

[Thaddeus]

Thai unemployment is currently 0.5% of the workforce (source: http://www.tradingeconomics.com/thailand/unemployment-rate) - one of the lowest in the world.

Lord knows what a time and motion study would show.

[animatic]

And the fact is not mentioned that the Thai overlords who run the factories where the foreigners would invest would simply hire more cheap laborers from Burma and elsewhere if the minimum wage went up.

I'm often amazed at how many Burmese workers there are who are doing jobs that obviously should be done by Thais. For example, the other day I had some tires replaced and guess what nationality the tire-changers were? I am all for helping the poor Burmese with employment. That's not what I'm talking about. I'm talking about the actual percentage of Burmese laborers compared to Thai laborers. Burmese do much of the rubber plantation work, seemingly all of the construction work, and much of the unskilled labor. Why aren't the Thais up in arms about this?

I am also, of course, all for Thais getting a decent salary. I don't see how they exist on the meager salaries they get in most cases. If the incoming party wants to help the poor, do something more to protect the workers from their Thai bosses.

I tend to agree with you. It has become far too easy for employers to bring in cheap foreign labour, and I believe it is not because they can't find Thais to work for minimum wage, but simple profiteering. This needs to change.

And of course it is the Thai business owners doing this, the farang 49% owners can't do this because their Thai competitors would drop a dime on them for doing so.

[Hockeybik]

A legally operating business, currently paying minimum wage to at least some of their employees when faced with a significant increase in the cost of labor can do one of a few things...

1) They can just pay the increase - assuming they have the excess profit just flowing in or laying around that enables them to "just pay it". (If you think many businesses can or will make this decision, you are not living in the real world.)

2) They can pay the increase by increasing price to their customers... but they will be thinking, how much can I increase price and not lose business? Can I increase at all?

3) They can fire some workers, outsource that labor to contract workers or send it to other countries. This is an easy decision for many minimum wage jobs (office cleaning, grounds maintenance, certain unskilled assembly, etc.)

4) They can become "illegal" and pay some workers "off the books" or find some other way around the increase in their labor costs. Many workers when faced with no job or a job "off the books" will welcome this option.

There are a few variations and combinations of these actions and probably a few more things but you get the idea. So what do you think businesses will do? Who really benefits in the end by each one of these decisions? Is the worker better off? Are ALL workers better off? Who is really better off with an increase in minimum wage?

If a 33% increase in the minimum wage is good from 200 to 300 baht per day is good, then why wouldn't 400 baht per day be even better? 500? 600?

[AyG]

I doubt very much that foreign investment would flee the country. After all, Thai workers are so well educated, speak excellent English and work so hard. At 300 Baht/day they would still represent excellent value for money. And the labour and business laws are so pro-foreigner they make it really easy to do business here. I'm sure Thailand will remain a hub of foreign investment for a long time to come.

[Thai at Heart]

And of course it is the Thai business owners doing this, the farang 49% owners can't do this because their Thai competitors would drop a dime on them for doing so.

I worked for a very long lived joint venture in agricultural exports in Thailand for several years. Apparently, at start up, the Thai side didn't think they should pay wages because they provided free food for the labour. So, it has come a long way in 50 odd years.

Coming back to the imported labour though, it is ridiculous that at a time when there is still demonstrable poverty in the country, that imported labour is allowed, and on the whole payed less than the minimum wage. I get very frustrated when the "benefit" of the country extends only to the business owners with no consideration for the "country" as a whole, least of all the consumer or the labour involved in feathering the pockets of these business owners.

[hyperdimension]

If a 33% increase in the minimum wage is good from 200 to 300 baht per day is good

An increase from 200 to 300 is 50%.

[whatsupdoc]

I doubt very much that foreign investment would flee the country. After all, Thai workers are so well educated, speak excellent English and work so hard. At 300 Baht/day they would still represent excellent value for money. And the labour and business laws are so pro-foreigner they make it really easy to do business here. I'm sure Thailand will remain a hub of foreign investment for a long time to come.

[laocowboy2]

Some basic points.

1. Raising the minimum wage always destroys some jobs at the margin. That is however not an overwhelming argument for not doing it as the raise (a) improves social welfare and (more importantly) ( creates increased consumer demand. Moreover the jobs destroyed will usually be in the traded goods sector - people cannot outsource getting a haircut to Vietnam. So some areas will lose less jobs than a pure financial calculation would appear to indicate.
2. Are the jobs so destroyed worth keeping in the first place? In many cases, probably no. Thailand is moving towards becoming a middle income country. Some industries have already gone (cheap garments, sports shoes) and others will follow. That's the way it is. Trying to turn back the tide by impoverishing the workforce is not the answer.
3. Slowly does it. PT should make the THB300 a medium term target, to be reached over (say) three years. Less sudden shock that way.
4. Consider different minimum wages in different places - this has already been suggested.

Ref the Burmese workers, Thailand should improve controls but this will only work if it becomes more possible for Burmese to work in Thailand legally - and tie these approved work visas (which should be targeted at particular sectors such as construction, agriculture and service) to proof that they are being paid at least the minimum wage - that way they cannot be pricing a Thai out of a job. For manufacturing jobs, if the Thai manufacturer wants to employ Burmese, he should be encouraged to open a factory in Burma - God knows they need the jobs there. This too would reduce the attractions of illegal migration.

I doubt very much that foreign investment would flee the country. After all, Thai workers are so well educated, speak excellent English and work so hard. At 300 Baht/day they would still represent excellent value for money. And the labour and business laws are so pro-foreigner they make it really easy to do business here. I'm sure Thailand will remain a hub of foreign investment for a long time to come.

[whatsupdoc]

Some basic points.

1. Raising the minimum wage always destroys some jobs at the margin. That is however not an overwhelming argument for not doing it as the raise (a) improves social welfare and (more importantly) ( creates increased consumer demand. Moreover the jobs destroyed will usually be in the traded goods sector - people cannot outsource getting a haircut to Vietnam. So some areas will lose less jobs than a pure financial calculation would appear to indicate.
2. Are the jobs so destroyed worth keeping in the first place? In many cases, probably no. Thailand is moving towards becoming a middle income country. Some industries have already gone (cheap garments, sports shoes) and others will follow. That's the way it is. Trying to turn back the tide by impoverishing the workforce is not the answer.
3. Slowly does it. PT should make the THB300 a medium term target, to be reached over (say) three years. Less sudden shock that way.
4. Consider different minimum wages in different places - this has already been suggested.

Ref the Burmese workers, Thailand should improve controls but this will only work if it becomes more possible for Burmese to work in Thailand legally - and tie these approved work visas (which should be targeted at particular sectors such as construction, agriculture and service) to proof that they are being paid at least the minimum wage - that way they cannot be pricing a Thai out of a job. For manufacturing jobs, if the Thai manufacturer wants to employ Burmese, he should be encouraged to open a factory in Burma - God knows they need the jobs there. This too would reduce the attractions of illegal migration.

Valid points. A slower and/or less drastic raise in minimum wages (as proposed by the Democrats) would be the right way to go. The process could be faster if the economy was good (worldwide, and also in Thailand, it definitely isn't yet and it might get worse again) or if there was an increase in productivity.

But an up to 90% sudden increase when the economy is still very weak and with no increase in productivity, that would be a recipe for serious trouble in the form of inflation and unemployment.

[Thai at Heart]

Some basic points.

1. Raising the minimum wage always destroys some jobs at the margin. That is however not an overwhelming argument for not doing it as the raise (a) improves social welfare and (more importantly) ( creates increased consumer demand. Moreover the jobs destroyed will usually be in the traded goods sector - people cannot outsource getting a haircut to Vietnam. So some areas will lose less jobs than a pure financial calculation would appear to indicate.
2. Are the jobs so destroyed worth keeping in the first place? In many cases, probably no. Thailand is moving towards becoming a middle income country. Some industries have already gone (cheap garments, sports shoes) and others will follow. That's the way it is. Trying to turn back the tide by impoverishing the workforce is not the answer.
3. Slowly does it. PT should make the THB300 a medium term target, to be reached over (say) three years. Less sudden shock that way.
4. Consider different minimum wages in different places - this has already been suggested.

Ref the Burmese workers, Thailand should improve controls but this will only work if it becomes more possible for Burmese to work in Thailand legally - and tie these approved work visas (which should be targeted at particular sectors such as construction, agriculture and service) to proof that they are being paid at least the minimum wage - that way they cannot be pricing a Thai out of a job. For manufacturing jobs, if the Thai manufacturer wants to employ Burmese, he should be encouraged to open a factory in Burma - God knows they need the jobs there. This too would reduce the attractions of illegal migration.

Valid points. A slower and/or less drastic raise in minimum wages (as proposed by the Democrats) would be the right way to go. The process could be faster if the economy was good (worldwide, and also in Thailand, it definitely isn't yet and it might get worse again) or if there was an increase in productivity.

But an up to 90% sudden increase when the economy is still very weak and with no increase in productivity, that would be a recipe for serious trouble in the form of inflation and unemployment.

Thinking cynically, if people were suddenly unemployed it would be a good way to encourage people back into the fields to get their 15000 baht per ton subsidised rice price.

[TAWP]

Do you have any idea as to what the cost of living is for many workers on Phuket? In higher paying Phuket that works out to about 5500 baht per month. My friend lives in a small room outside of Patong. He pays 5000 baht/month. Its basic. A cheap meal on the street goes for 40-60 baht now. If he cut corners, he could probably survive food wise at 100 baht/day which is approx. 3000 baht/month. Sure, if he lived on processed noodles and processed pig entrails it might be a little less, but some people do not want to eat garbage. That puts his starting costs per month at 8000 baht and he hasn't even paid for electricity or water or work clothes.

GK, please stop being so ignorant or trying to pretend that everyone is somehow 'entitled' to live like a western social welfare check person.

Most people earning lower salaries live several people together. Many even cook and eat together. Imagine that. Even I did that is a young person. And we saved a lot of money that way.

Not everyone can own a house or own a car. Notions like that is what caused the government-introduced housing-market collapse in the US.

[anterian]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

Paying the minimum wage is exploiting workers?

A lot of people here just haven't got any idea what typical wages in Thailand are. True, it may not be much in Western eyes but I know quite a lot of Thai making a little more than minimum but they all have quite a decent living standard, own a motorcycle, have a proper place to live etcetera.

Raising the minimum wage by 50-90% in a short time is going to be a disaster. Labour intensive industries and the service industries (like restaurants, hotels) will have the choice to increase prices, lay off employees or close shop. In the end, many of the lowly -paid employees will be worse off due to unemployment and inflation.

Thank you for your effort at the perpetuation of the myth that minimum wage allows for a quality standard of life. These people may be in possession of a motorcycle or a home, but the mimimum wage class often do not own those things. Those material possessions are financed and the people live in debt waiting for the house of cards to collapse. No one at a minimum wage job can ever hope to save enough to own a home or motorcycle outright. They can however, live in a building crammed with family members with limited privacy.

Do you know what the minimum wage in Thailand is? The minimum wage ranges from 159 baht a day in Phayao to 221 baht in Phuket for a national average of 175 baht.

Do you have any idea as to what the cost of living is for many workers on Phuket? In higher paying Phuket that works out to about 5500 baht per month. My friend lives in a small room outside of Patong. He pays 5000 baht/month. Its basic. A cheap meal on the street goes for 40-60 baht now. If he cut corners, he could probably survive food wise at 100 baht/day which is approx. 3000 baht/month. Sure, if he lived on processed noodles and processed pig entrails it might be a little less, but some people do not want to eat garbage. That puts his starting costs per month at 8000 baht and he hasn't even paid for electricity or water or work clothes. Let's say he keeps all those other basic costs at 2000 baht per month, which means he dresses like a hobo and gets crap from his employer for looking like a Pattaya expat, altogether that puts him at 10,000 baht in basic living expenses per month. This would mean no healthcare insurance, no covering of costs for his motorbike, nothing else. One of the minimum wage girls I am aquainted with works at a typical tourist spot and lives in a similar room, except shecrams in her minimum wage boyfriend and her 1 son from a previous marriage. Combined income is better, but in her case she has to pay the expenses of a growing boy. School uniforms, school supplies and fees add up. They live in one <deleted> room smaller than my salon

Please don't tell me that people have more than a marginal existence on minimum wage in Thailand. The labour market is not free and wage costs have been artificially forced down. Any free market capitalist would understand that wages would have risen long ago as the available labour force shrunk. However, the government and the oligarchy have acted to keep wages low. Basically, the arguments for the status quo are the arguments that support the continued totalitarian interference in the labour market and this brings to mind the repressive Soviet state era where central economic planners forced down wages. Part of the capitalist equation is to accept that labour has the freedom to shiftt. Keep in mind that many of the government's economic policies indirectly subsidize the merchant class and service industry in Thailand. Tax policy, and infrastructure investment is not made with the needs of the minimum wage earner in mind.

The argument that somehow a small increase in minimum wage will force companies to relocate is weak. No hard evidence has been given to support the argument. What one has are projections based upon the same flawed thinking that was used to justify the government's interference in the labour market to keep wages low. An increase in worker income will fuel consumer spending and allow the workers some breathing room. A small increase in wages allows the wages to move in the direction of where they should be. I would like to see the people arguing against the wage increase try to live a month on a minimum wage income.

Time after time I go to write a comment and find that you have beaten me to it You display a good intimate knowledge of the problems of the poor in Thailand. I think many members here should get out of their expensive condos and meet real people in the villages and slum areas of cities.

[Crushdepth]

China is currently experiencing labour unrest as workers demand higher salaries. Vietnam is also facing a move to higher salaries. Companies that have already invested billions in factories cannot just up and leave. Although some sweatshop jobs may indeed go elsewhere, there is an increasing emphasis in the west on fair trade practices, so exploiting workers in a country is not a long term strategy.

Paying the minimum wage is exploiting workers?

A lot of people here just haven't got any idea what typical wages in Thailand are. True, it may not be much in Western eyes but I know quite a lot of Thai making a little more than minimum but they all have quite a decent living standard, own a motorcycle, have a proper place to live etcetera.

Raising the minimum wage by 50-90% in a short time is going to be a disaster. Labour intensive industries and the service industries (like restaurants, hotels) will have the choice to increase prices, lay off employees or close shop. In the end, many of the lowly -paid employees will be worse off due to unemployment and inflation.

Thank you for your effort at the perpetuation of the myth that minimum wage allows for a quality standard of life. These people may be in possession of a motorcycle or a home, but the mimimum wage class often do not own those things. Those material possessions are financed and the people live in debt waiting for the house of cards to collapse. No one at a minimum wage job can ever hope to save enough to own a home or motorcycle outright. They can however, live in a building crammed with family members with limited privacy.

Do you know what the minimum wage in Thailand is? The minimum wage ranges from 159 baht a day in Phayao to 221 baht in Phuket for a national average of 175 baht.

Do you have any idea as to what the cost of living is for many workers on Phuket? In higher paying Phuket that works out to about 5500 baht per month. My friend lives in a small room outside of Patong. He pays 5000 baht/month. Its basic. A cheap meal on the street goes for 40-60 baht now. If he cut corners, he could probably survive food wise at 100 baht/day which is approx. 3000 baht/month. Sure, if he lived on processed noodles and processed pig entrails it might be a little less, but some people do not want to eat garbage. That puts his starting costs per month at 8000 baht and he hasn't even paid for electricity or water or work clothes. Let's say he keeps all those other basic costs at 2000 baht per month, which means he dresses like a hobo and gets crap from his employer for looking like a Pattaya expat, altogether that puts him at 10,000 baht in basic living expenses per month. This would mean no healthcare insurance, no covering of costs for his motorbike, nothing else. One of the minimum wage girls I am aquainted with works at a typical tourist spot and lives in a similar room, except shecrams in her minimum wage boyfriend and her 1 son from a previous marriage. Combined income is better, but in her case she has to pay the expenses of a growing boy. School uniforms, school supplies and fees add up. They live in one <deleted> room smaller than my salon

Please don't tell me that people have more than a marginal existence on minimum wage in Thailand. The labour market is not free and wage costs have been artificially forced down. Any free market capitalist would understand that wages would have risen long ago as the available labour force shrunk. However, the government and the oligarchy have acted to keep wages low. Basically, the arguments for the status quo are the arguments that support the continued totalitarian interference in the labour market and this brings to mind the repressive Soviet state era where central economic planners forced down wages. Part of the capitalist equation is to accept that labour has the freedom to shiftt. Keep in mind that many of the government's economic policies indirectly subsidize the merchant class and service industry in Thailand. Tax policy, and infrastructure investment is not made with the needs of the minimum wage earner in mind.

The argument that somehow a small increase in minimum wage will force companies to relocate is weak. No hard evidence has been given to support the argument. What one has are projections based upon the same flawed thinking that was used to justify the government's interference in the labour market to keep wages low. An increase in worker income will fuel consumer spending and allow the workers some breathing room. A small increase in wages allows the wages to move in the direction of where they should be. I would like to see the people arguing against the wage increase try to live a month on a minimum wage income.

Time after time I go to write a comment and find that you have beaten me to it You display a good intimate knowledge of the problems of the poor in Thailand. I think many members here should get out of their expensive condos and meet real people in the villages and slum areas of cities.

It's patronising and condescending to assume that people "don't understand the problems of the poor like you do". What a crock. Do you come from a poor country? What have YOU ever done for the poor? If you think things are bad in Thailand, maybe you need to get out a bit more. As for 'real people'...get off your high horse it's pathetic.

[trainman34014]

And the fact is not mentioned that the Thai overlords who run the factories where the foreigners would invest would simply hire more cheap laborers from Burma and elsewhere if the minimum wage went up.

I'm often amazed at how many Burmese workers there are who are doing jobs that obviously should be done by Thais. For example, the other day I had some tires replaced and guess what nationality the tire-changers were? I am all for helping the poor Burmese with employment. That's not what I'm talking about. I'm talking about the actual percentage of Burmese laborers compared to Thai laborers. Burmese do much of the rubber plantation work, seemingly all of the construction work, and much of the unskilled labor. Why aren't the Thais up in arms about this?

I am also, of course, all for Thais getting a decent salary. I don't see how they exist on the meager salaries they get in most cases. If the incoming party wants to help the poor, do something more to protect the workers from their Thai bosses.

I tend to agree with you. It has become far too easy for employers to bring in cheap foreign labour, and I believe it is not because they can't find Thais to work for minimum wage, but simple profiteering. This needs to change.

I have a garden man who comes once a month to cut lawn/tidy trees and flowers etc. Ha normally brings a team of 6 people, 4 of whom are Burmese. Last time he came he was 2 people short and I asked him where they were; 'problems with visa for Burmese' he said, so I asked why he can't just get a couple of Thai's to fill in the gaps. He says that Thai people don't want to work in this kind of job anymore unless they are involved in family who is running the business. Says he knows plenty of Thai's who are out of work but they are not interested. Says also that a lot of Thai's who are out of work become very idle because family supports them too easily.

[RickBradford]

Some basic points.

1. Raising the minimum wage always destroys some jobs at the margin. That is however not an overwhelming argument for not doing it as the raise (a) improves social welfare and (more importantly) ( creates increased consumer demand. Moreover the jobs destroyed will usually be in the traded goods sector - people cannot outsource getting a haircut to Vietnam. So some areas will lose less jobs than a pure financial calculation would appear to indicate.
2. Are the jobs so destroyed worth keeping in the first place? In many cases, probably no. Thailand is moving towards becoming a middle income country. Some industries have already gone (cheap garments, sports shoes) and others will follow. That's the way it is. Trying to turn back the tide by impoverishing the workforce is not the answer.
3. Slowly does it. PT should make the THB300 a medium term target, to be reached over (say) three years. Less sudden shock that way.
4. Consider different minimum wages in different places - this has already been suggested.

Ref the Burmese workers, Thailand should improve controls but this will only work if it becomes more possible for Burmese to work in Thailand legally - and tie these approved work visas (which should be targeted at particular sectors such as construction, agriculture and service) to proof that they are being paid at least the minimum wage - that way they cannot be pricing a Thai out of a job. For manufacturing jobs, if the Thai manufacturer wants to employ Burmese, he should be encouraged to open a factory in Burma - God knows they need the jobs there. This too would reduce the attractions of illegal migration.

Valid points. A slower and/or less drastic raise in minimum wages (as proposed by the Democrats) would be the right way to go. The process could be faster if the economy was good (worldwide, and also in Thailand, it definitely isn't yet and it might get worse again) or if there was an increase in productivity.

But an up to 90% sudden increase when the economy is still very weak and with no increase in productivity, that would be a recipe for serious trouble in the form of inflation and unemployment.

Many of the jobs paying minimum wage are jobs that Thais won't do anyway. I recently visited a factory in eastern Thailand where they'd gone to the trouble of bringing Burmese workers all the way in because they are prepared to do the work, work hard, and do the overtime to make extra money.

I think the 15,000 minimum wage for graduates would have a much bigger effect -- driving up the graduate unemployment rate very rapidly.

[geriatrickid]

There are several false assumptions being raised in this discussion.

Yes, there are many Burmese workers in Thailand. The assumption is made that they are being paid minimum wage and that employers are complying with health and safety codes or labour standards This s wrong. I think it is quite obvious that many are working under illegal labour conditions. Increasing the minimum wage will not impact the companies and industries that hire these people because they will continue to break the law until the labour department stops the activity. These Burmese workers will continue to be exploited by Thais.

It is much easier for an employer to use Burmese workers when those workers are hidden from view. However, there is no way retail chains, the service sector and large factories are going to be able to replace Thai workers with Burmese labour. The Thai people would object and these businesses would have serious blowback.

The assumption that the tourist industry and large factories will suffer is misleading. Many of the larger hospitality chains and factories already pay wages or offer benefits that exceed the proposed minimums. The wage changes won't have much of an impact. on them Yes, some smaller operations might have problems, but these are marginal operations and it is time they were given a kick in the pants to improve efficiency. These are the companies that are usually non compliant with the basic labour codes anyway.

One of the big complaints made about NAFTA was that jobs would be sucked out of Canada and the USA and end up in the Mexico. On the contrary, it forced many companies to invest in improved labour and production efficiency. It also caused wages to increase and labour conditions to improve in Mexico. The end result was that while some sectors lost jobs, others gained jobs and new opportunities. A small wage increase in Thailand will eventually be followed by wage increases in the region. It is happening in China now. China has started moving away from labour intensive industries to skill based industries. Vietnam wants to go upmarket, not become sweat shop central.

You may think me cold and uncaring when I write that it would be a good thing for some of the marginal companies to close shop. The benefit though would be that the companies that are efficient and well managed would do better as companies that were most likely to compete unfairly because they were in non compliance with basic health and safety, environmental protection or labour codes closed. The Ford and Toyota manufacturing facilities have invested heavily in training their labour force and in being good corporate citizens, at least better than the companies that illegally dump their toxic waste or that do not invest in staff training. Ford and Toyota will not suffer and they wlll not move their jobs.

In all of the arguments given to say the wage increase will damage Thailand, there have not been any specific examples cited. Yes, someone says his factory will be forced to layoff some workers. Ok, but what does it really mean? Does it mean that the factory relied on brute labour over efficiencies in production? Does it mean that the production goals would have been met with fewer workers anyway and the employer was being charitable by keeping the workers? I don't think so. The shakeout of some marginal operations would benefit the health of the national economy because those companies that had invested in their labour forces and that were well managed would expand to take up slack in the supply of services or goods.

I think it is time that the government measures to force down wages and to indirectly subsidize inefficient industries must end if Thailand is to move forward. Some companies will suffer, but those companies that are well managed and well capitalized to invest in the future will prosper.